Regional Development

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Regional Economics is a special subject of economics which handles analytical problems on a spatial, sub-national, namely regional or urban level. The smaller a region, the more evident is the efficiency of soft factors like tradition, historic experiences or local/regional behavioral norms. Therefore the literature on regional economics shows strong connections between economics, geography and sociology.

Even though regional economics uses many methods of the classical economics and the foreign trade theory, in this process, a differentiation towards macroeconomics and hence the accentuation of its independency is important:

  • There are noticeable discrepancies in the dynamics of important parameters on a regional level, which can’t be explained sufficiently by the affiliation with a country. Examples are the differences between Northern and Southern Italy or East and West Germany. Regional differences may cause severe economic and social problems, an overall national aggregation could however wash them out and hence hamper the possibility to display important political connections.
  • Institutional methods and instruments may be different on a national and a regional level. Hence, a specific politico-economic instrument could help one region within a country but obstruct another. Therefore, the relation between the State and its Regions has to be displayed in a clear economic manner.
  • Regions are not single-acting, insular units, but interact heavily with each other. These interactions may influence the development of regional alliances and should thus be modeled.
  • The space and the distribution of economic and social activities are important parts of the development of regions and nations. Hence the spatial dimension should always be a central factor in the corresponding models.